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Senate President Sweeney, April 5, 2019. Re Barry, Wendi - Borough Clerk From: Hinrichs, Addison <[email protected]> Sent: Friday, April 05, 2019 9:12 AM Subject: Path to Progress Attachments: Model Resolution - Path to Progress.docx; PDF EFPP Report.pdf Dear Municipal Clerk, I am reaching out on behalf of Senate President Steve Sweeney to request that the town council consider a resolution of support for the Path to Progress recommendations. I have attached the model resolution that we would like you to use and a copy of the Path to Progress report for you and the council to review. Please don’t hesitate to reach out if you have any questions or concerns. Thank you, Addison B. Hinrichs New Jersey Senate Majority 125 West State Street P.O. Box 099 Trenton, NJ 08625‐0099 Office: 609‐847‐3700 Fax: 609‐633‐7254 [email protected] 1 Resolution in Support of Path to Progress Recommendations made by New Jersey Economic and Fiscal Policy Workgroup WHEREAS, New Jersey faces a daunting fiscal crisis; and WHEREAS, for two decades, while county and municipal governments made the proper pension payments, New Jersey governors from both parties severely underfunded the pension system for teachers and State government workers; and WHEREAS, while local government pension systems are funded at the national average, the State’s unfunded liability for pensions and retiree health benefits now tops $150 billion – four times the size of the State budget; and WHEREAS, actuaries project the State will have to increase its pension contribution from $3.2 billion in this year's budget to $6.7 billion to reach the Actuarially Required Contribution (ARC) by FY 2023; and WHEREAS, health care costs continue to rise, and New Jersey and its local governments cannot sustain the unparalleled platinum-level benefits that they provide to their employees; and WHEREAS, municipalities cannot address other major cost drivers, such as career-end sick leave payouts in excess of $100,000, without relief from State government; and WHEREAS, the State must bring pension and health care costs under control before they crowd out all other important spending needs, such as reinvestment in NJ Transit, making higher education more affordable and properly funding state aid to school districts to hold down property taxes. NOW, THEREFORE BE IT RESOLVED that (name of county or municipality) expresses its support for the recommendations of the Path to Progress report issued by the New Jersey Economic and Fiscal Policy Workgroup; and BE IT FURTHER RESOLVED, that a copy of this Resolution is forwarded to (insert the names of Assembly Representatives), (insert name of State Senator), Senate President Sweeney, Assembly Speaker Coughlin, Senator Paul Sarlo, Senator Steve Oroho, Assembly Majority Leader Greenwald, Assemblywoman Eliana Pintor-Marin, Senator Tony Bucco, Senator Troy Singleton, Senator Dawn Addiego, the Governor of State of New Jersey, the New Jersey Association of Counties, and the New Jersey State League of Municipalities. Table of Contents I. Statement of Purpose ………………………….…………..………………… pg. 1 II. Committee Structure, Process and Membership …………………..……….... pg. 2 III. Executive Summary.......................................................................................... pg. 4 IV. Pension & Benefit Reform………………….………………......….......…… pg. 10 V. Education Reform at the Administrative Level ………................................. pg. 19 VI. County & Municipal Government Reform and Shared Services ................... pg. 22 VII. State and Local Government Tax Structure ………………........................... pg. 26 VIII. Leveraging Assets to Stabilize the Pension System …………...…….….…. pg. 29 1 I. Statement of Purpose New Jersey faces a fiscal crisis of unsustainable legacy pension and benefit costs that suppress economic growth and competitiveness by crowding out needed investments in infrastructure, higher education, and the economic development that other states are making. This is a direct result of the failure of governors and legislatures of both parties to make the necessary pension payments. But if this crisis is not resolved, it will be impossible to meet our commitment to fully fund public schools, expand preschool and make New Jersey affordable for families, senior citizens, and businesses. Furthermore, New Jersey continues to struggle with inefficiencies at all levels of government. Steps have been taken in recent years, such as the two percent property tax cap, increasing employer and employee pension contributions, and creating a new prescription benefit procurement process. Still, many of the necessary reforms have been ignored due to a lack of political will. That is why the New Jersey Legislature created the Economic and Fiscal Policy Workgroup and charged it with a broad mission – to identify ways to address soaring pension and benefit costs, hold down property taxes, make state and local government and school districts more efficient, assess the equity and efficiency of our state and local tax structure, leverage the value of state assets, and mitigate the negative impact of the federal tax law that targeted high-cost states. 2 II. Committee Process, Structure, and Membership The Economic and Fiscal Policy Workgroup held its initial organizational meeting on January 30, 2018. Over the course of several months, the Workgroup held seven meetings that included presentations by policy experts on critical issues and robust discussion of the pros and cons of potential solutions. Eventually, each member of the group was asked to submit policy recommendations based upon those presentations and discussions. The recommendations were shared with the Workgroup and aggregated into five categories: 1) Pension & Benefit Reform 2) Education Reform at the Administrative Level 3) County & Municipal Government Reform and Shared Services 4) State and Local Government Tax Structure 5) Leveraging Assets to Stabilize the Pension System The Workgroup split into five subcommittees that held meetings to review and evaluate those recommendations. Each subcommittee submitted a report with final recommendations. While the group did not vote on each individual recommendation, this report, in its entirety, represents the consensus of the assembled experts. The issuance of this report represents the first step in what we anticipate being an ongoing process in the months ahead that will expand to involve stakeholders and the general public in an informed debate about how to put New Jersey on the path to progress. 3 ECONOMIC AND FISCAL POLICY GROUP MEMBERS Co-chairs: Senator Paul Sarlo - Chairman, Senate Budget and Appropriations Committee Senator Steven Oroho - Senate Republican Conference Chair Assemblyman Louis Greenwald - Assembly Majority Leader Legislative Members: Senator Steve Sweeney – Senate President Senator Dawn Addiego - Deputy Minority Whip Senator Anthony Bucco - Senate Minority Budget Officer Assemblywoman Eliana Pintor Marin - Chairwoman, Assembly Budget Senator Troy Singleton - Chairman, Senate Military and Veterans’ Affairs Subcommittee Chairs: Dr. Ray Caprio - Rutgers Bloustein School of Planning & Public Policy; Bloustein Local Government Research Center Frank Chin - Managing Director, American Public Infrastructure Richard Keevey - Rutgers University Bloustein School of Planning & Public Policy and Woodrow Wilson School of Public and International Affairs Dr. Michael Lahr - Rutgers Bloustein School of Planning & Public Policy and Rutgers Economic Advisory Service Marc Pfeiffer - Rutgers University, Bloustein School of Planning & Public Policy; Bloustein Local Government Research Center Non-Legislative Members: Dr. Henry Coleman - Rutgers University, Bloustein School of Planning & Public Policy Lucille Davy - Of Counsel, Mason, Griffin & Pierson Feather O’Connor Houstoun - Adviser for Public media and journalism at Wyncote Foundation Ray Kljajic - American Public Infrastructure Inc. Robert Landolfi - Business Administrator, Woodbridge Township (retired) Senator Raymond Lesniak - Chair, Lesniak Institute for American Leadership Jerry Maginnis - Rowan University, William G. Rohrer College of Business Dr. Donald Moliver - Monmouth University, Kislak Real Estate Institute Dr. Joel Naroff - President, Naroff Economic Advisers Inc. Peter Reinhart - Monmouth University Kislak Real Estate Institute Kurt Stroemel – President, HR&S Financial Services Ralph Thomas - CEO/Executive Director, New Jersey Society of Certified Public Accountants 4 III. Executive Summary New Jersey State Legislative Leadership initially established the New Jersey Economic and Fiscal Policy Review Committee to examine the negative impact of federal policies on New Jersey’s residents, businesses, economy, real estate values, affordability, and competitiveness and to have the committee identify strategies to mitigate the impact. The Committee’s mission quickly developed into a full assessment of the long-term budget challenges facing state and local governments; the fairness, adequacy, efficiency and affordability of the state’s current revenue structure across all levels of government; and how to deliver services more efficiently and cost- effectively at various levels of government. The following report of the Committee provides the findings and recommendations. A. Pension and Benefit Reform According to the Pew Charitable Trusts, the condition of New Jersey’s pension system ranks among the most underfunded in the country. The State’s combined pension and retiree health benefit liabilities of $151.5 billion are four times
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